Latvian Hydro Electricity Brings Down Prices in the Estonia Price Area in April

High water in Latvia and the resulting marked increase in generation from hydro-electricity power plants had a major impact on April electricity prices in the Estonia price area of the Nord Pool Spot power exchange. The rise in water levels in the Daugava river started in the first week of April and peaked in the second half of the month and led to a 28-fold increase in electricity imports compared to March.

The supply of cheap hydro electricity coming onto the market significantly reduced Estonian domestic production and the amounts being sold by Estonian market participants in the NPS Estonia price area.

The NPS Estonia price area average daily price fell in the first ten days of April by almost a half from 53 EUR/MWh to 27.44 EUR/MWh, and the average price for April was 40.32 EUR/MWh, which is 7.52 EUR/MWh or 15.7% lower than the March price.

In the words of Taavi Veskimägi, Chairman of the Elering Board, the fall in prices in the NPS Estonia price area in April is the best proof of the socio-economic benefit to be had for Estonian consumers if the electricity systems are sufficiently well connected and an effective market is organised between the different countries. “The objections that are raised to the construction of international connections and to the development of the market are not worth taking seriously. There is no more expensive solution for a society in socio-economic terms than an isolated electricity system that relies on one producer and one source of fuel. From the point of view of wider Estonian economic development, such an approach is not sustainable in the European Union,” he said.
The Latvian electricity system was exporting electricity throughout the whole of April, and 127 GWh of electricity were imported from Latvia into the Estonia price area. The amount bought from the Estonia price area for Lithuania almost tripled to 15 GWh, while imports from Lithuania fell by 60% to 24 GWh. April also saw the first imports from Finland since November, with 1.4 GWh coming in. Exports to Finland fell by only 6% from March to 245 GWh as the difference in price between the Estonia and Finland price areas continued to be high.

The reservoirs for hydro power plants in the Nordic countries were filled to very good levels, even more than at the same time a year earlier, and because the reservoirs were so well filled, the NPS system price fell to 10 EUR/MWh.